Insurance World

Copyright 2006 Stacey Zimmerman

When you take out a mortgage on your home, the lender will require you to show proof of homeowner’s insurance on the property. The lender wants to protect their investment. However, whether or not you have a mortgage on your property or not, you should have homeowner’s insurance to protect yourself in case of loss.

The biggest mistake most homeowners make when getting homeowner’s insurance is purchasing coverage they don’t need. For example, living in a high elevated area should mean they you do not need to carry flood insurance. Many homeowners find themselves paying for flood insurance when there is no possibility of being flooded. However, if you live in an area that could easily be flooded, make sure you do carry this extra flood insurance on your property.

Another item to check on is how far away you live from the fire department, as well as a fire hydrant. The closer you live to either one of these could significantly reduce your rates. Your insurance agent should ask you for this information, however, if they don’t, make sure you give the information to them to see if it could lower your rates.

If you are like many homeowners, you may find that you have your life insurance with one company and your auto insurance with another. If you have all of your insurance policies with the same company, it could give you as much as a twenty percent discount on your insurance rates. You may also want to ask your insurance agent about how much you can save by raising your deductible on your homeowner’s insurance.

Another way to save on your homeowner’s insurance is to ask them what type of discounts you would be entitled to if you made changes to your property. By adding security measures, such as an alarm system or even double locks on doors and windows, may entitle you to several discounts.

If you are the owner of a dog, you’ll want to make sure your insurance agent is aware that you have one. Unfortunately, if you have a dog that is on the list of dangerous dogs to have, it may either raise your rates or they may not insure you at all. In order to protect yourself, however, you’ll want to check with them to find out where your dog fits in to the picture and you may end up making further security measures regarding your dog. A large fenced in area for your dog may help to reduce your rates.

Another important matter is renter’s insurance. This only applies to you if you have a rental unit in your home, but it will protect you and your renter’s for any loss of items due to an unforeseen incident in your home, such as theft or fire. Many landlords require their renters to provide proof of renter’s insurance before they move in. If they do not have renter’s insurance, the loss of their items may fall back on you.

The most important thing you can do to save money on your homeowner’s insurance is to price compare your home insurance once every year. Make sure if you have made any updates to your property, you update your current insurance company. Insurance companies, along with their rates, change quickly and if you’ve had the same insurance company for years, you might be surprised at how much you could’ve saved over the years.

A typical homeowners insurance policy has four key ingredients. They are:

1. Homeowner insurance coverage for your home itself
2. Homeowner insurance coverage for your family’s personal items
3. Homeowner liability coverage
4. Coverage for the expenses of temporary living should you have to vacate your home because of fire, flood or other disaster covered by your homeowner policy.

The portion of the homeowner coverage for your home itself provides funds for the repair or reconstruction of your home if it has been damaged or destroyed by disaster such as hurricane, hail, lightning, fire or any other covered event. What is not covered with a standard homeowner policy is normal wear and tear on your home or damage caused by an earthquake or flood. (There are homeowner policies that cover these, but they are more costly and in some regions, such as flood prone areas they are not available at all.)

When you take our your homeowner policy you’ll want to be sure and buy enough coverage for total reconstruction of your home

Most standard homeowner policies also protect structures on your property although detached from your home, such as in-law quarters, garage or gazebo. It’s common practice to cover these unattached structures for ten percent of the covered value of your house.

Should any of your clothing, electronic equipment, furnishings, or other personal belongings be destroyed by insured disaster, or stolen, they are covered by your homeowner policy. Most carriers cover them at the rate of 50-70 percent of the total dollar figure of your home structure’s coverage.

There is also a clause in your homeowner policy for coverage of off-premises items. Which means that if you take your personal belongings elsewhere and they become lost or damaged your homeowner policy will generally reimburse you at least ten percent of the amount of coverage that you have on them when they are on your home premises. Homeowner policies also provide up to $500 of protection against unauthorized credit card use as well.

For high priced items like jewelry and fur a standard homeowner policy will usually limit your coverage to $100-$2000. You can purchase coverage up to appraised value for an additional charge. In either case there is no deductible and coverage includes your accidental loss of the items.

Foliage around your home such as trees and shrubs also come under the protection of your homeowner policy. Usually the money figure is five percent of the home’s insured value, but up to $500 for each bloom. They are protected against even riots, vandalism, explosion and airplane crashes. They are not insured against wind or disease damage.

Liability coverage protects you against litigation should anyone or anything become injured on your premises. You are also covered for damage done by your children or pets to the property of others as well. This coverage is in force even if you are not in your own home or on your own property. It covers any court defense as well as any court appointed financial award against you. The coverage limit is generally more than $100,000, although a $300,000 minimum is a standard recommendation.

Your homeowner policy also takes care of living expenses if you temporarily have to vacate your home because of damage and during repair and reconstruction of your home. Coverage includes hotel costs, meals in restaurants and other common expenses. Coverage limit of 20 percent of your home’s insured value is common for this. If part of your home served as rental property your homeowner policy will also reimburse you the amount of the rent that you are losing because of the disaster.